EXHIBIT 4.(C)1

              ECI Telecom Ltd. Employee Share Incentive Plan 2002,
                         as last amended March 4, 2004.


<PAGE>




               ECI TELECOM LTD. EMPLOYEE SHARE INCENTIVE PLAN 2002
                           (as amended July 30, 2003)

                               A. NAME AND PURPOSE

1.    NAME: This plan, as amended from time to time,  shall be known as the "ECI
      Telecom Ltd. Employee Share Incentive Plan 2002" (the "Plan").

2.    PURPOSE:  The purpose and intent of the Plan is to provide  incentives  to
      employees  and  directors  of ECI Telecom  Ltd.  (the  "Company")  and any
      subsidiary or affiliate  thereof,  and other  beneficiaries,  by providing
      them with options  ("OPTIONS") to purchase  Ordinary Shares (nominal value
      NIS 0.12 per share) in the Company ("Shares"),  pursuant to (i) a plan (or
      plans)  approved by the Board of Directors  of the Company  (the  "Board")
      which is (are)  designed to benefit  from,  and is (are) made pursuant to,
      the  provisions of Section 102 of the Israeli  Income Tax  Ordinance  [New
      Version],  1961 (the  "Ordinance") and any regulations,  rules,  orders or
      procedures  promulgated  thereunder (a "Qualified Plan"),  and/or (ii) any
      other   share   incentive   plan  which  is   approved  by  the  Board  (a
      "Non-Qualified  Plan"),  provided that any Qualified Plan or Non-Qualified
      Plan  (individually - a "Sub-Plan" and  collectively - "Sub-Plans")  shall
      not contain any provisions which are  inconsistent  with the general terms
      and conditions  contained herein below (the term "Plan" shall,  unless the
      context  requires  otherwise,  include  any  and  all  Sub-Plans  then  in
      existence).

                   B. GENERAL TERMS AND CONDITIONS OF THE PLAN

3.    ADMINISTRATION:

3.1   The Plan will be administered by the Board or by a Remuneration  Committee
      (the  "Committee"),  if permitted by applicable law, which will consist of
      such number of Directors of the Company (not less than two in number),  as
      may be fixed from time to time by the Board.  The Board shall  appoint the
      members of the  Committee,  may from time to time remove  members from, or
      add members to, the  Committee  and shall fill  vacancies in the Committee
      however caused.  The Board may make grants in accordance with the Plan and
      otherwise  administer the Plan without having received  recommendations on
      such matters from the Committee.  If a Committee is not  appointed,  or to
      the extent that the Board acts in accordance  with the Plan without having
      received   recommendations  from  the  Committee,  the  term  "Committee,"
      whenever used herein, shall mean the Board.

3.2   The  Committee  shall  select one of its members as its Chairman and shall
      hold its meetings at such times and places as it shall determine.  Actions
      taken by a majority of the members of the Committee  present and voting at
      a meeting of the Committee at which a majority of its members are present,
      or  acts  reduced  to,  or  approved  in  writing  by all  members  of the
      Committee,  shall be the valid acts of the  Committee.  The  Committee may
      appoint a  Secretary,  shall keep  records of its  meetings and shall make


<PAGE>


      such rules and  regulations  for the  conduct of its  business as it shall
      deem advisable.

3.3   Subject to applicable  law and to the general terms and conditions of this
      Plan and subject to any special provisions of any Sub-Plan,  the Committee
      shall have full authority in its discretion,  from time to time and at any
      time,  to  determine  (i) the  persons  to whom  Options  shall be granted
      ("Grantees"),  (ii) the  number of Shares to be  covered  by each  Option,
      (iii)  the  time or times at which  the same  shall be  granted,  (iv) the
      schedule and  conditions  on which such  Options may be  exercised  and on
      which  such  Shares  shall be paid for,  (v)  subject to  applicable  law,
      whether or not the Options will be granted  pursuant to Section 102 of the
      Ordinance ("102  Options"),  (vi) with regard to Section 102 as amended in
      amendment  132 of the Ordinance - whether the Options will be granted to a
      trustee  under  Section  102(b) of the  Ordinance  and the election of the
      "Work Income Route"  according to Section  102(b)(1) of the Ordinance (the
      "Work  Income  Route") or the "Capital  Gains Route"  according to Section
      102(b)(2) of the Ordinance (the "Capital  Gains Route"),  or - whether the
      Options will not be granted to a trustee, as detailed in Section 102(c) of
      the  Ordinance,  and/or  (vii)  any other  matter  which is  necessary  or
      desirable for, or incidental to, the administration of the Plan.

3.4   The Committee may from time to time adopt such rules and  regulations  for
      carrying  out the Plan as it may deem  best.  No member of the Board or of
      the Committee shall be liable for any action or determination made in good
      faith with respect to the Plan or any Option granted thereunder.

3.5   The  interpretation  and construction by the Committee of any provision of
      the Plan or of any Option  thereunder shall be final and conclusive unless
      otherwise determined by the Board.

4.    ELIGIBLE GRANTEES:

4.1   Options  may be granted  (i) under a Qualified  Plan to any  officer,  key
      employee or other  employee of the  Company,  whether or not a Director of
      the  Company  ("Employee")  and  (ii)  under a  Non-Qualified  Plan to any
      Employee,  director,  consultant  or  contractor  of the Company.  For the
      purpose  of the  Plan  and  subject  to any  limitation  contained  in any
      Sub-Plan,  the term "Employee" shall include  employees of subsidiaries of
      the Company.  Anything in this Plan to the contrary  notwithstanding,  the
      authorization and implementation of all grants of Options to "Nosei Misra"
      (Office  Holders  of the  Company),  as such term is defined in the Israel
      Companies  Law,  1999  (the  "Companies  Law"),  shall be  subject  to the
      provisions of applicable law.

4.2   The grant of an Option to a Grantee hereunder,  shall neither entitle such
      Grantee to  participate,  nor  disqualify him from  participating,  in any
      other grant of options  pursuant to this Plan or any other share incentive
      or stock option plan of the Company or any of its subsidiaries.


<PAGE>


5.    GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST:

5.1   The  effective  date of the grant of an Option (the "Date of Grant") shall
      be the date the Committee  resolved to award the Option,  unless specified
      otherwise by the Committee.  The Committee shall promptly give the Grantee
      written  notice (the  "Notice of Grant") of the grant to the Grantee of an
      Option.

5.2   Anything herein to the contrary notwithstanding, Options granted under the
      Plan  may be  granted  by  the  Company  to a  trustee  designated  by the
      Committee and, with respect to 102 Options, to the trustee approved by the
      Israel  Commissioner of Income Tax (the "Trustee"),  and the Trustee shall
      hold each such Option and the Shares issued upon exercise thereof in trust
      (the  "Trust")  for the  benefit  of the  Grantee  in respect of whom such
      Option was granted (the "Beneficial Grantee").  In accordance with Section
      102 of the Ordinance and the rules and regulations promulgated thereunder,
      102 Options and any Shares  received  upon exercise of such Options may be
      locked  up and held by the  Trustee  for a period of at least (i) one year
      from the end of the tax year in which the 102 Options are granted,  if the
      Company  elects the Work Income  Route,  or (ii) two years from the end of
      the tax year in which the 102 Options are granted,  if the Company  elects
      the Capital  Gains Route,  or (iii) such other period as shall be approved
      by the Israel  Commissioner of Income Tax. All  certificates  representing
      Shares  issued to the Trustee  under the Plan shall be deposited  with the
      Trustee, and shall be held by the Trustee until such time that such Shares
      are released from the Trust as herein provided.  If under the terms of any
      Sub-Plan, Options and/or Shares are to be held in trust, the Trustee shall
      hold the same  pursuant to the Company's  instructions  from time to time.
      The Trustee  shall not use the voting  rights of any such Shares and shall
      not exercise said rights in any way whatsoever.

5.3   After the Options have vested,  the  following  provisions  shall apply in
      respect of any Options or Shares in trust, as follows:

      (a)   Upon the  written  request of any  Beneficial  Grantee,  the Trustee
            shall release from the Trust the Options granted,  and/or the Shares
            issued,  on behalf of such  Beneficial  Grantee,  by  executing  and
            delivering  to the  Company  such  instrument(s)  as the Company may
            require,  giving  due  notice  of such  release  to such  Beneficial
            Grantee,  provided,  however, that the Trustee shall not release any
            such Options  and/or Shares to such  Beneficial  Grantee  unless the
            latter,  prior to, or concurrently with, such release,  provides the
            Trustee with  evidence,  satisfactory  in form and  substance to the
            Trustee,  that all  taxes,  if any,  required  to be paid  upon such
            release have, in fact, been paid.

      (b)   Alternatively,  provided the Shares have been  registered on a stock
            exchange or admitted to trading on an electronic  securities trading
            system (such as the Nasdaq Stock  Market) or an exemption  from such
            registration  is  available,  upon the written  instructions  of the
            Beneficial  Grantee  to sell any  Shares  issued  upon  exercise  of
            Options, the Trustee shall use his reasonable efforts to effect such
            sale  and  shall  transfer  such  Shares  to the  purchaser  thereof
            concurrently  with  the  receipt,  or  after  having  made  suitable
            arrangements  to secure the payment of, the proceeds of the purchase
            price in such  transaction.  The Trustee  shall  withhold  from such
            proceeds  any and all taxes  required  to be paid in respect of such


<PAGE>


            sale,  shall  remit the amount so withheld  to the  appropriate  tax
            authorities  and  shall  pay the  balance  thereof  directly  to the
            Beneficial Grantee,  reporting to such Beneficial Grantee and to the
            Company the amount so withheld and paid to said tax authorities.

5.4   DIVIDEND: All Shares issued upon the exercise of Options granted under the
      Plan shall entitle the Beneficial  Grantee thereof to receive dividends in
      respect thereof.  For so long as Shares issued to the Trustee on behalf of
      a  Beneficial  Grantee  are  held  in the  Trust,  the  dividends  paid or
      distributed  in respect  thereof  shall be remitted to the Trustee for the
      benefit of such Beneficial Grantee or directly to the Beneficial  Grantee,
      as determined by the Board.

6.    RESERVED  SHARES:  The  Company has  reserved  29,760,700  authorized  but
      unissued Shares for purposes of the Plan and the Company's  previous Share
      Incentive  Plans,  subject to adjustment as provided in Section 11 hereof.
      Notwithstanding the aforesaid,  the Committee shall have full authority in
      its discretion to determine  that the Company may issue,  for the purposes
      of this Plan, previously issued Shares which are held by the Company, from
      time to time, as Dormant  Shares (as such term is defined in the Companies
      Law).  Any Shares under the Plan, in respect of which the right  hereunder
      of a Grantee to purchase the same shall for any reason  terminate,  expire
      or otherwise  cease to exist,  shall again be available  for grant through
      Options under the Plan.

7.    GRANT OF OPTIONS:

7.1    The Committee in its discretion may award to Grantees Options to purchase
       Shares available under the Plan. Options may be granted at any time after
       this Plan has been  approved by the  Shareholders  of the Company and the
       Shares  reserved  for the Plan  effectively  created,  but not later than
       December 31, 2012.

7.2    Anything herein to the contrary  notwithstanding,  Options may be granted
       under  the  Plan  prior to the date of any  approval  regarding  the Plan
       required of the  Shareholders  of the Company,  provided such Options are
       made subject to such approval.

7.3    The Notice of Grant of an Option shall state,  inter alia,  the number of
       Shares  covered  thereby,  the Vesting  Period (as  hereinafter  defined)
       thereof, the dates when it may be exercised,  the exercise price, whether
       the Option is a 102 Option and the Route the Company has elected for such
       102 Option, if applicable,  the schedule on which such Shares may be paid
       for  and  such  other  terms  and  conditions  as  the  Committee  at its
       discretion may prescribe, provided that they are consistent with (i) this
       Plan and (ii) the specific  provisions  of the  Sub-Plan  under which the
       Option is awarded.

7.4    Without  derogating  from the rights and  powers of the  Committee  under
       Section 7.3 hereof,  unless  determined  otherwise by the Committee,  the
       schedule  pursuant to which Options granted under the Plan shall vest and
       the Grantee  thereof  shall be entitled to pay for and acquire the Shares
       (the  "Vesting  Period"),  shall be such that the Options  shall be fully
       vested on the first  business day following the passing of four (4) years
       from the  Date of Grant as  follows:  12.5% of such  Options  shall  vest
       following  the  elapse  of six (6)  months  from the  Adoption  Date (the
       "ADOPTION  DATE" for the  purpose of this Plan means the Date of Grant or


<PAGE>


       any other date  determined by the Committee for a given grant of Options)
       and a further  6.25% of such  Options  shall vest on the last day of each
       quarter,  during fourteen (14) consecutive quarters  thereafter.  Vesting
       Period of an  Option  shall  mean,  for the  purpose  of the Plan and its
       related instruments, the period between the Date of Grant and the date on
       which the Grantee may  exercise the rights  awarded  pursuant to terms of
       the Option.

7.5    Anything  herein  to the  contrary  in  this  Plan  notwithstanding,  the
       Committee shall have full authority to determine any provisions regarding
       the  acceleration of the Vesting Period of any Option or the cancellation
       of all or any portion of any outstanding restrictions with respect to any
       Option or Share upon certain events or  occurrences,  and to include such
       provisions  in the  Notice of Grant on such terms and  conditions  as the
       Committee shall deem appropriate.

8.     EXERCISE  PRICE:  The exercise price per Share covered by an Option shall
       be as determined solely by the Committee.

9.     EXERCISE OF OPTIONS:

9.1    Options shall be exercisable  pursuant to the terms under which they were
       awarded and subject to the terms and  conditions  of this Plan and of the
       Sub-Plan under which they were awarded.

9.2    Options  granted  pursuant  to  the  Plan  shall  be  exercisable  by the
       Grantee's  signing and returning to the Company at its  principal  office
       (or,  with  respect  to  Options  held  in the  Trust,  by the  Trustee's
       delivering  upon  receipt of  written  instructions  from the  Beneficial
       Grantee),  a "Notice of Exercise"  specifying  the number of Shares to be
       purchased, accompanied by the payment therefor, and containing such other
       terms and conditions as the Committee shall prescribe from time to time.

9.3    Anything herein to the contrary  notwithstanding,  but without derogating
       from the  provisions  of Section  10  hereof,  if any Option has not been
       exercised  and the shares  covered  thereby  not paid for within ten (10)
       years after the Date of Grant (or any other relevant  period set forth in
       the Notice of Grant),  such  Option and the right to acquire  such Shares
       shall  terminate,  all  interests and rights of the Grantee in and to the
       same shall  ipso  facto  expire,  and,  in the event  that in  connection
       therewith  any Options are held in Trust as  aforesaid,  such Trust shall
       ipso facto  expire.  Such  Options  will return to the  unallocated  pool
       stated in section 6 until  instructed  by the Company that some or all of
       such Options are again to be held in trust for one or more Grantees.

9.4    Each  payment for Shares shall be in respect of a whole number of Shares,
       shall be effected in cash or by a cashier's or certified check payable to
       the order of the Company,  or such other method or payment  acceptable to
       the Company.

9.5   (a)   In the event of any Change in Control (as hereinafter defined), each
            outstanding Option not yet vested shall, unless otherwise determined
            by the Board,  automatically  vest in full so that each such  Option
            shall,  immediately  prior to the  effective  date of the  Change in
            Control,  become  fully  exercisable  for all of the  Shares  of the
            Company  underlying  such  Option.  Each such  Option  shall  remain


<PAGE>


            exercisable  for Shares in the Company  existing after the Change of
            Control until the original  expiration or sooner  termination of the
            Option.

      (b)   CHANGE IN CONTROL shall mean a change in ownership or control of the
            Company effected through any of the following transactions:

            (i)   the  acquisition,  directly  or  indirectly  by any  person or
                  related  group  of  persons   (other  than  Clal   Electronics
                  Industries Ltd., Koor Industries Ltd. and/or their affiliates)
                  of  beneficial  ownership of securities  possessing  more than
                  thirty-five  percent (35%) of the total combined  voting power
                  of the Company's outstanding securities;

            (ii)  a change  in the  composition  of the  Board  over a period of
                  thirty-six  (36)  consecutive  months  or  less  such  that  a
                  majority of the members of the Board ceases,  by reason of one
                  or more contested  elections to the Board,  to be comprised of
                  individuals  who either (x) have been  members of the Board of
                  Directors  continuously  since the beginning of such period or
                  (y) have been elected or nominated  for election as members of
                  the Board  during  such  period by at least a majority  of the
                  shareholders of the Company prior to such change;

            (iii) a merger or consolidation  or a similar business  combination,
                  in which securities  possessing fifty percent (50%) or more of
                  the total combined  voting power of the Company's  outstanding
                  securities are  transferred  to a person or persons  different
                  from the persons holding those securities immediately prior to
                  such transaction; or

            (iv)  the   sale,   transfer   or  other   disposition   of  all  or
                  substantially all of the Company's assets.

10.    TERMINATION OF EMPLOYMENT:

10.1   IN  GENERAL:  Subject to the  provisions  of Section  10.2  hereof,  if a
       Grantee should, for any reason,  cease to be employed by the Company or a
       subsidiary  thereof,  all of his  rights,  if any,  in respect of (i) all
       Options  theretofore  granted  to such  Grantee  under  the  Plan and not
       exercised  (to the extent  that they are  exercisable)  within the Notice
       Period,  as defined below,  and/or (ii) all Shares which may be purchased
       by such  Grantee  under the Plan and not fully paid for within the Notice
       Period,  shall  ipso  facto  terminate.  In the event of  resignation  or
       discharge  of a Grantee  from the employ of the  Company or a  subsidiary
       thereof, for the purposes of this Section 10.1, the "Notice Period" shall
       be the  period  which  ends 30 days  after the date on which the  Grantee
       actually  ceases to be employed by the Company or a  subsidiary  thereof.
       The transfer of a Grantee from the employ of the company to the employ of
       a subsidiary  of the Company,  or from the employ of a subsidiary  of the
       Company  to the  employ  of the  Company  or  another  subsidiary  of the
       Company,  shall not be deemed a termination  of  employment  for purposes
       hereof. Whether an authorized leave of absence on military,  governmental
       or public  service or  otherwise,  or  termination  of  employment  under


<PAGE>


       certain  conditions,  shall constitute  termination of employment for the
       purposes hereof shall be conclusively determined by the Committee.

10.2   CESSATION  OF  EMPLOYMENT  FOR  CAUSE:  Anything  herein to the  contrary
       notwithstanding,  if the  Grantee  should  cease  to be  employed  by the
       Company or a subsidiary  thereof due to (i) breach of the Grantee's  duty
       of loyalty  towards the Company,  or (ii) breach of the Grantee's duty of
       care towards the Company, or (iii) the Grantee has committed any flagrant
       criminal  offense,  or (iv) the Grantee has  committed a  fraudulent  act
       towards the Company, or (v) the Grantee caused  intentionally,  by act or
       omission, any financial damage to the Company, or (vi) if the Company may
       terminate the Grantee's  employment  without severance pay,  according to
       the Israel  Severance Pay Law, 1963, all Options  theretofore  granted to
       such  Grantee  under the Plan,  whether  vested or not,  shall ipso facto
       expire immediately and be of no legal effect.

10.3   DEATH, DISABILITY, RETIREMENT:   Anything herein to the contrary
       notwithstanding:

      (a)   If a Grantee  should  die while in the  employ of the  Company  or a
            subsidiary  thereof,  his estate, to the extent that it has acquired
            by will  and/or  by  operation  of law the  rights  of the  deceased
            Grantee in  connection  with the  purchase  of any shares  under the
            Plan, shall have, subject to the specific provisions, if any, of the
            relevant  Sub-Plan,  the right,  for a period of twelve  (12) months
            from the date of death of such  Grantee,  to exercise such rights of
            the deceased Grantee not theretofore  exercised,  to the same extent
            (but only to the extent) that the deceased  Grantee  could have done
            so during or at the end of such 12-month  period had he survived and
            had he continued his employment with the Company or its subsidiary.

      (b)   If a  Grantee,  while in the employ of the  Company or a  subsidiary
            thereof, should be incapacitated by reason of accident or illness or
            other  cause  approved  by the  Committee,  and by  virtue  of  such
            incapacity  should,  in the judgment of the  Committee,  be rendered
            unable to continue to be so employed,  the Committee  shall have the
            right in its discretion, subject to the specific provisions, if any,
            of the relevant  Sub-Plan,  to permit such Grantee (or his guardian)
            to  continue  to  enjoy  rights  under  the Plan on such  terms  and
            conditions,  with such limitations and subject to such requirements,
            as the Committee in its discretion may determine,  subject, however,
            to such specific limitations,  if any as are imposed by the relevant
            Sub-Plan.  In exercising  its judgment as  aforesaid,  the Committee
            may,  but shall not be required  to, take into  account the economic
            situation  of the  Grantee,  his  ability  to obtain  other  gainful
            employment and such other factors as the Committee in its discretion
            may deem relevant.

      (c)   If a Grantee should retire, he shall, subject to the approval of the
            Committee, continue to enjoy such rights, if any, under the Plan and
            on such terms and conditions,  with such  limitations and subject to
            such  requirements as the Committee in its discretion may determine,
            subject,  however,  to such  specific  limitations,  if any,  as are
            imposed by the relevant Sub-Plan.

<PAGE>


10.4   DETERMINATION  OF  DISABILITY  OR  RETIREMENT:  Whether the  cessation of
       employment of a particular  Grantee is by reason of "disability"  for the
       purposes of Section 10.3(b) hereof or by virtue of  "retirement"  for the
       purposes of Section 10.3(c) hereof,  on the one hand, or is a termination
       of employment  otherwise than by reason of such disability or retirement,
       on the other hand,  shall be finally and  conclusively  determined by the
       Committee in its absolute discretion.

10.5   DIRECTORS,  CONSULTANTS OR SERVICE PROVIDERS: In the event that a Grantee
       who is a director,  consultant,  contractor or other service  provider of
       the Company or a subsidiary thereof,  ceases, for any reason, to serve as
       such,  all  of his  rights,  if  any,  in  respect  of  (i)  all  Options
       theretofore  granted to such Grantee under the Plan and not exercised (to
       the  extent  that they are  exercisable)  within the  Notice  Period,  as
       defined  below,  and/or (ii) all Shares  which may be  purchased  by such
       Grantee  under the Plan and not fully paid for within the Notice  Period,
       shall  ipso  facto  terminate.  In the  event of  cessation  of  services
       provided by the Grantee to the Company or a subsidiary  thereof,  for the
       purposes of this Section  10.5,  the "Notice  Period" shall be the period
       which ends on:

      (a)   with regard to directors, 30 days after the date on which a director
            submits  notice of  resignation  from the Board or the date on which
            the  shareholders of the Company or the  subsidiary,  as applicable,
            remove such director from the Board; and

      (b)   with regard to consultants,  contractors or other service providers,
            30 days after the date on which the services  agreement between such
            consultant,  contractor or service provider, as applicable,  and the
            Company or the subsidiary, as applicable, terminates; or the date on
            which either of the parties to such agreement sends the other notice
            of its intention to terminate said agreement.

10.6   Notwithstanding  the  foregoing   provisions  of  this  Section  10,  the
       Committee  may  provide,  either  at the time an  Option  is  granted  or
       thereafter,  that such Option may be exercised after the periods provided
       for in this Section 10, but in no event beyond the term of the Option (as
       specified in Section 9.3 hereto).

11.    CHANGES IN CAPITALIZATION AND CORPORATE TRANSACTIONS:

11.1   DEFINITIONS:

       "SALE OF ALL OF THE COMPANY'S  ASSETS" means the sale,  transfer or other
       disposition of all or substantially all of the Company's assets.

       "MERGER"  means  a  merger  or   consolidation   or  a  similar  business
       combination, in which securities possessing more than fifty percent (50%)
       of  the  total  combined  voting  power  of  the  Company's   outstanding
       securities  are  transferred  to a person or persons  different  from the
       persons holding those securities immediately prior to such transaction.


<PAGE>


11.2   Subject to any action by the  shareholders of the Company  required under
       applicable law, the number of Shares covered by each outstanding  Option,
       and the number of Shares which have been  authorized  for issuance  under
       the Plan but as to which no Options  have yet been  granted or which have
       been returned to the Plan upon  cancellation  or expiration of an Option,
       as well as the price per share of Shares covered by each such outstanding
       Option, shall be proportionately adjusted for any increase or decrease in
       the number of issued Shares  resulting from a stock split,  reverse stock
       split, stock dividend,  combination or  reclassification of the Shares or
       the payment of a stock dividend (bonus shares) with respect to the Shares
       or any other increase or decrease in the number of issued Shares effected
       without receipt of consideration by the Company; provided,  however, that
       conversion  of any  convertible  securities  of the Company  shall not be
       deemed to have been "effected  without  receipt of  consideration".  Such
       adjustment  shall be made by the Committee,  whose  determination in that
       respect  shall be final,  binding  and  conclusive.  Except as  expressly
       provided  herein,  no issuance by the Company of shares of any class,  or
       securities  convertible  into shares of any class,  shall affect,  and no
       adjustment by reason thereof shall be made with respect to, the number or
       price of Shares subject to an Option.

11.3   Unless  otherwise  provided  by the Board,  in the event of the  proposed
       dissolution or liquidation of the Company,  all outstanding  Options will
       terminate  immediately prior to the consummation of such proposed action.
       In such case,  the Committee may declare that any Option shall  terminate
       as of a date fixed by the  Committee  and give each  Grantee the right to
       exercise his Option,  including  any Option which would not  otherwise be
       exercisable.

11.4   If, upon a Merger or Sale of all of the Company's  Assets (as hereinafter
       defined),  the consideration  received (the "Consideration") shall be the
       exchange of the  securities of the Company for the  securities of another
       corporation or a parent or subsidiary of such other corporation  (each, a
       "Successor  Entity"),  then,  each Option shall, at the sole and absolute
       discretion of the Committee, either:

      (a)   be  substituted  for  options to  purchase  shares of the  Successor
            Entity,  and appropriate  adjustments  shall be made in the exercise
            price per share to reflect such exchange; or

      (b)   be  assumed  by the  Successor  Entity  such  that the  Grantee  may
            exercise  the Options for such number of shares of the Other  Entity
            or amount of other securities thereof,  and appropriate  adjustments
            shall  be made in the  purchase  price  per  share to  reflect  such
            exchange.

       Anything herein to the contrary  notwithstanding,  the provisions of this
       Section 11.4 shall be subject to all the terms and provisions of the Plan
       remaining in full force and effect.

11.5   In the event that all or substantially  all of the issued and outstanding
       share  capital of the Company is to be sold (the  "Sale"),  each  Grantee
       shall be obligated to  participate in the Sale and sell his or her Shares
       and/or Options in the Company, provided, however, that each such Share or
       Option  shall be sold at a price  equal to that of any other  Share  sold
       under the Sale (minus the applicable  exercise  price),  while accounting
       for changes in such price due to the respective terms of any such Option,
       and subject to the absolute discretion of the Board.


<PAGE>


11.6   The Committee shall  determine the specific  adjustments to be made under
       this Section 11 or in any event of a change in  capitalization  or in the
       event of a corporate transaction which is not detailed in this Section 11
       (spin-off, spin-up, etc.), and its determination shall be conclusive.

12.    ASSIGNABILITY AND  TRANSFERABILITY:  No Option and no Shares  purchasable
       hereunder  which  were  not  fully  paid  for,  shall  be  assignable  or
       transferable by the Grantee;  and during the lifetime of the Grantee each
       and all of his rights to purchase  shares  hereunder shall be exercisable
       only by him. At the request of a Grantee,  Shares  purchased and paid for
       following  the  exercise  of an Option may be issued  in, or  transferred
       into,  the name of the Grantee and another  person jointly with the right
       of  survivorship,  or in the name of a bank or broker either for the sole
       account of the  Grantee or for the account of the  Grantee  jointly  with
       another person.

13.    AGREEMENT TO PURCHASE FOR INVESTMENT:

13.1   By exercise of an Option  hereunder,  the Grantee  agrees that any Shares
       purchased  thereunder  shall be purchased for  investment  and not with a
       view to their  distribution  as that  term is used in the  United  States
       Securities  Act of 1933, as amended,  unless in the opinion of counsel to
       the Company,  such  distribution is in compliance with or exempt from the
       registration and prospectus requirements of that Act; and, if required by
       the Company,  the Grantee shall sign a certificate  to that effect at the
       time or times he  exercises  such  Option.  The Company does not obligate
       itself to register the shares under the United States  Securities  Act of
       1933, as amended.

13.2   The Company may place a legend on any share certificate  delivered to the
       Grantee  to the  effect  that such  shares are  acquired  pursuant  to an
       investment  representation  without  registration  of the  Shares and are
       subject to restrictions under this Section 13.

14.    TERM AND AMENDMENT OF THE PLAN:

14.1   The Plan was adopted by the Board of  Directors of the Company on October
       7, 2002 (subject to approval by the Shareholders of the Company not later
       than December 31, 2002), and shall expire on December 31, 2012 (except as
       to Options  outstanding on that date).  Such expiration  shall not affect
       the  instructions  contained herein or in any applicable law with respect
       to the Options and Shares held in the Trust at such time of expiration.

14.2   Subject to  applicable  law, the Board of Directors  may, at any time and
       from  time to time,  terminate  or amend the Plan in any  respect  except
       that,  without the approval of the  Shareholders of the Company:  (i) the
       total  number  of Shares  which  may be issued  under the Plan may not be
       increased (except by adjustment pursuant to Section 11 hereof);  (ii) the
       provisions of Section 4 regarding eligibility may not be modified;  (iii)
       the provisions of Section 8, regarding the exercise price at which Shares
       may be offered pursuant to Option awards,  may not be modified (except by
       adjustment  pursuant to Section 11 hereof);  and (iv) the expiration date
       of the  Plan  may not be  extended.  In no event  may any  action  of the
       Company  alter or impair the rights of a Grantee,  without  his  consent,
       under any Option previously granted to him.


<PAGE>


15.    CONTINUANCE  OF  EMPLOYMENT:  Neither the Plan nor the grant of an Option
       thereunder  shall  impose any  obligation  on the Company or a subsidiary
       thereof,  to continue any Grantee in its employ,  and nothing in the Plan
       or in any Option granted  pursuant  thereto shall confer upon any Grantee
       any right to  continue  in the  employ  of the  Company  or a  subsidiary
       thereof, or restrict the right of the Company or a subsidiary thereof, to
       terminate such employment at any time.

16.    GOVERNING  LAW:  The Plan and all  instruments  issued  thereunder  or in
       connection therewith, shall be governed by, and interpreted in accordance
       with, the laws of the State of Israel.

17.    APPLICATION OF FUNDS: The proceeds  received by the Company from the sale
       of Shares  pursuant  to Options  granted  under the Plan will be used for
       general corporate purposes of the Company or any subsidiary thereof.

18.    TAX CONSEQUENCES:  Any tax consequences and any obligations regarding any
       compulsory  payments  arising  from the grant or  exercise of any Option,
       from the payment for, or the  subsequent  disposition  of, Shares covered
       thereby or from any other  event or act (of the  Company or the  Grantee)
       hereunder, shall be borne solely by the Grantee. Furthermore, the Grantee
       shall  indemnify  the  Company  and the  Trustee  and hold them  harmless
       against and from any and all liability for any such tax  consequences  or
       compulsory payments, or interest or penalty thereon,  including,  without
       limitation, liabilities relating to the necessity to withhold, or to have
       withheld, any such tax from any payment made to the Grantee.

19.    MULTIPLE  AGREEMENTS:  The terms of each  Option  may  differ  from other
       Options  granted  under the Plan at the same time,  or at any other time.
       The  Committee  may also grant  more than one  Option to a given  Grantee
       during the term of the Plan,  either in addition  to, or in  substitution
       for, one or more Options previously granted to that Grantee. The grant of
       multiple Options may be evidenced by a single Notice of Grant or multiple
       Notices of Grant, as determined by the Committee.

20.    NON-EXCLUSIVITY  OF THE PLAN:  The  adoption of the Plan by the Board and
       the  Shareholders  of the Company  shall not be  construed  as  amending,
       modifying or rescinding any previously approved incentive  arrangement or
       as  creating  any   limitations  on  the  power  of  the  Board  and  the
       Shareholders of the Company to adopt other incentive arrangements as they
       may deem desirable,  including, without limitation, the granting of stock
       options  otherwise  than  under the Plan,  and such  arrangements  may be
       either applicable generally or only in specific cases.